3Com to Trim 500 More From Its Work Force

Technology: Payroll of networking equipment maker will be less than half the size it was at the start of last year.

3Com Corp. is cutting 500 jobs, or about 8.5% of its work force, as the maker of networking gear seeks to return to profitability by its fiscal fourth quarter.

3Com also said it's transferring some marketing, human resources and finance employees and responsibilities to its Business Networks, Business Connectivity and CommWorks operating units. 3Com, which had about 5,900 workers before the latest cuts began, is eliminating positions worldwide, said Brian Johnson, spokesman for the Santa Clara, Calif.-based company.

3Com, which has reported losses in seven straight quarters, last year cut half its work force of 12,000 and shed product lines as customers reduced spending amid a slumping U.S. economy. The company is retrenching again in an attempt to fulfill a promise to investors that its loss streak will end this year.

"It basically was on the wall that this company would either have to cut operating costs or increase sales" to reach its profitability target, said Kaufman Bros. analyst Clifton Gray in New York, who rates 3Com's shares an "accumulate." Gray doesn't own shares of 3Com.

"Considering the state of the communications equipment industry right now--very soft--it makes a lot of sense. I just wonder whether this is going to be the last slash of their employees."

3Com shares fell 1 cent to $6.10 on the Nasdaq Stock Market. They have fallen 41% in the last year. In its fiscal second quarter, which ended Nov. 30, sales fell 50% from a year ago.

On a conference call last month, Chief Financial Officer Michael Rescoe said sales will fall in the third quarter from the second, potentially by 5% to 10%, as customers slow orders late in the calendar year.

Revenue will be unchanged or "slightly up" in the fourth quarter from the second, he said.

3Com's fiscal year ends May 31. Johnson declined to specify the types of positions that will be eliminated under the latest round of staff cutbacks.